When you created your estate plan, you may not have made accommodations for your stepchildren. Perhaps they were not in your life at that time, or your relationship has grown over the years. Regardless of the motivation, if you want to ensure that your stepchildren receive an inheritance after you die, it is important to update your estate plan. There are many options available to help you incorporate your stepchildren.
4 Options to Make Stepchildren Beneficiaries of Your Estate
If you are considering an estate plan update to incorporate your stepchildren, the following are four options that should be weighed:
- Consider using life insurance policies to make gifts of specific dollar amounts to your stepchildren. You do not have to give your stepchildren the entire value of the policy. Instead, you can have them receive a percentage of the death benefit. This allows you to provide for your stepchildren without necessarily having to amend your will or trust. The drawback to this method is that it could result in your stepchildren receiving a greater percentage of your overall estate than you originally intended if the remainder of your estate shrinks significantly before your death.
- Consider making gifts to your stepchildren during your lifetime. If you can afford to do so and if your attorney and tax advisor recommend it, making gifts to your stepchildren while you are still alive can help you provide for these family members without needing to amend your will or trust. A negative aspect of using this method is that it is difficult to predict your financial situation many years down the road. You may give away assets now that you need later.
- Consider amending your trust to incorporate your stepchildren. In order for this method to work effectively, it is important to fund the trust during your lifetime or through the use of a pour over will at your death. If the assets are never moved into the trust, your stepchildren will receive nothing.
- Consider executing a codicil to your will or creating a new one entirely. Doing so can help ensure that your stepchildren are treated as if they were your biological children when you die. However, if all of your assets are held in trust, owned jointly with a right of survivorship, or have a named beneficiary, the terms of the will may not guarantee that your stepchildren ultimately receive anything.
Fortunately, an experienced attorney can help you determine which option is best for your needs. Contact us today at (714) 282-7488 for more information.